fS3<3.<3 


UNIVERSITY  OF  ILLINOIS 
LIBRARY 

Class  Book  Volume 

Ja  09-20M  \ 


HOUSE  JSo.  1405. 


€oinmomuealtl)  of  Jlla0Bact)U0£tt0. 


June  11,  1900. 

To  the  Honorable  the  Senate  and  the  House  of  Representatives. 

The  committee  on  Manufactures  had  referred  to  them  the 
following  ordeT :  — 

Ordered^  That  the  Committee  on  Manufactures  be  instructed  to  inves- 
tigate forthwith  the  expediency  of  reducing  the  price  at  which  gas  for 
heating  and  illuminating  purposes  is  sold  to  the  consumer  in  the  city  of 
Boston,  and  that  committee  report  the  gross  and  the  net  cost  of  the  pro- 
duction and  distribution  of  such  gas,  together  with  all  details  showing 
how  such  cost  and  prices  are  arrived  at,  and  also  copies  of  all  contracts 
made  by  any  and  every  corporation  or  association  engaged  in  the  pro- 
duction or  distribution  of  such  gas  with  any  other  such  corporation  or 
association,  and  also  whether  there  has  been  any  violation  of  any  of  the 
laws  of  this  Commonwealth  by  any  such  corporation  or  association,  and 
if  so,  what  violations  and  what  measures  have  been  taken  to  punish  or 
restrain  the  offenders,  together  with  its  recommendations,  to  the  Gen- 
eral Court  on  or  before  the  first  day  of  April  in  the  year  1900.  All 
hearings  by  said  committee  under  this  order  shall  be  public,  and  said 
committee  shall  have  power  to  summon  persons  and  papers. 

Pursuant  to  this  order  your  committee  begs  leave  to  re- 
port as  follows  >  — 

It  has  held  twenty-seven  public  sessions  on  this  matter 
and  has  listened  to  many  witnesses,  including  Henry  M. 
Whitney,  president  of  a  number  of  the  local  gas  companies 
and  of  the  New  England  Gas  and  Coke  Association,  Thomas 
W.  Lawson,  former  vice-president  and  general  manager  of 
many  of  the  local  gas  companies,  Walter  E.  Addicks,  chief 
engineer,  Frank  E.  Smith,  assistant  treasurer,  and  other- 
officers  and  directors  of  all  of  the  Boston  gas  companies, 


2  GAS  INVESTIGATION.  [June, 

Parker  C.  Chandler,  for  many  years  counsel  for  the  Bay 
State  Gas  Company  of  Delaware,  and  a  number  of  gas  con- 
sumers and  others  having  expert  or  professional  knowledge 
of  ^stcji/^i&fe^ij's.: 

It*has*#als*o  by  iuff'or  sub-committees  visited  the  office  of 
^..Jfe^'SfjS^fa^:  ^Mand  Coke  Association,  also  their 
worlds  in.  tyer.ett,#  for  #tfie  purpose  of  examining  their  books 
an^'^j^^^jilsl  Operation,  also  the  offices  of  the  Boston 
gas  light  companies,  and  has  made  an  examination  of  the 
books  and  accounts  of  the  Boston,  South  Boston,  Roxbury, 
Bay  State  of  Massachusetts,  Brookline,  Jamaica  Plain  and 
Dorchester  Gas  Light  Companies  and  of  the  Massachusetts 
Pipe  Line  Company. 

In  the  examination  of  the  different  witnesses  your  com- 
mittee has  been  greatly  assisted  by  able  counsel  representing 
different  gas  companies  and  individuals. 

In  order  to  deal  intelligently  with  the  questions  presented 
for  solution  by  this  order,  it  is  necessary  briefly  to  outline 
the  situation  of  the  gas  companies  in  the  city  of  Boston. 
The  following  table  computed  from  the  returns  of  these 
companies  to  the  Board  of  Gas  and  Electric  Light  Commis- 
sioners for  the  year  ending  June  30,  1899,  discloses  some 
of  the  most  important  facts  relative  to  these  companies  :  — 


Company. 

Capital  Stock 

Value  of 
Shares 

Held  in 
Mass. 

Total  Assets. 

Total 
Liabilities. 

Accumulated 
Surplus. 

Bay  State,  . 

$2,000,000  00 

$200 

$2,646,663  18 

$2,393,932  74 

$252,730  44 

Boston,  . 

2,500,000  00 

2,000 

7,812,865  94 

3,248,806  11 

4,564,059  83 

Brookline,  . 

2,000,000  00 

1,300 

4,627,907  35 

4,931,503  10 

*303,595  75 

Charlestown, 

500,000  00 

463,900 

646,680  83 

558,998  98 

87,681  85 

Dorchester,  . 

519,600  00 

1,100 

987,265  67 

776,958  63 

210,307  04 

East  Boston, . 

220,000  00 

187,875 

302,858  09 

223,786  87 

79,071  22 

Jamaioa  Plain, 

250,000  00 

208,200 

431,455  68 

275,006  00 

156,449  68 

Roxbury, 

600,000  00 

100 

1,210,675  63 

779,169  27 

431,506  36 

South  Boston, 

440,000  00 

1,200 

669,165  66 

521,044  69 

148,120  97 

Total,  . 

$9,029,600  00 

$865,875 

$19,335,538  03 

$13,709,206  39 

$6,233,523  14 

*  Deficit. 


1900.] 


HOUSE  —  No.  1405. 


3 


It  appears  from  this  table  that  the  capital  stock  of  the 
companies  engaged  in  furnishing  gas  in  the  city  of  Boston  is 
slightly  in  excess  of  $9,000,000;  that  of  this  capital  stock, 
according  to  the  table,  less  than  10  per  cent,  is  now  held  in 
Massachusetts.  Of  this  $865,875  apparently  held  in  Massa- 
chusetts, the  larger  part  of  the  Jamaica  Plain  stock  has  been 
pledged  to  the  Central  Trust  Company  as  security  for  the  bonds 
of  the  New  England  Gas  and  Coke  Company,  which  will  be 
hereinafter  described..  A  word  should  be  said  relative  to  the 
column  entitled  "  Total  Assets."  It  was  testified  by  Mr.  F.  E. 
Smith,  assistant  treasurer  of  the  Boston,  Roxbury  and  South 
Boston  companies,  that  it  had  been  the  practice  of  these  com- 
panies to  charge  all  new  work  to  "construction,"  and  to 
charge  off  nothing  to  depreciation.  If  this  has  been  the  system 
adopted,  it  follows  that  the  book  assets  are  largely  in 
excess  of  the  actual  assets,  for  in  the  nature  of  things  there 
must  have  been  a  substantial  depreciation.  The  column 
entitled  ' '  Accumulated  Surplus "  shows  that  these  com- 
panies have  besides  paying  the  dividends  to  their  stock- 
holders accumulated  from  their  earnings  from  consumers 
a  large  sum  of  money  which  is  sufficient  to  secure  the  stock- 
holders from  accident  or  contingency  and  loss  a  large  sum 
for  depreciation.  A  single  exception  must  be  made  to  this 
statement.  The  Brookline  Company  has  no  surplus.  Its  lia- 
bilities are  $303,595.75  in  excess  of  its  assets.  This  grows 
out  of  the  peculiar  conditions  under  which  the  Brookline 
company  has  done  its  business  for  the  last  seven  years, 
which  will  be  more  fully  explained  hereafter.  Of  all  these 
companies  the  Charlestown  and  East  Boston  are  the  only 
ones  which  are  now  under  the  management  of  boards  of 
directors  elected  by  stockholders  who  are  residents  in  our 
own  communities.  Substantially  all  the  stocks  of  all  the 
other  companies  have  been  bought  up  by  speculators,  and 
are  pledged  to  two  New  York  trust  companies  as  security 
for  large  amounts  of  so-called  stocks  and  bonds  put  out 
by  the  Bay  State  Gas  Company  of  Delaware,  a  Delaware 
corporation,  and  the  New  England  Gas  and  Coke  Company, 
a  syndicate  of  eleven  trustees,  nine  of  whom  are  not  residents 
of  this  Commonwealth. 


4 


GAS  INVESTIGATION.  [June, 


It  may  be  assumed  that  the  main  facts  relative  to  the  Bay 
State  Gas  Trust  so-called  are  sufficiently  well  known  so  as  to 
make  a  detailed  history  here  unnecessary.  This  gas  trust  was 
the  subject  of  an  investigation  by  a  special  committee  of  the 
Legislature  in  1893,  the  result  of  which  investigation  was 
chapter  474  of  the  Acts  of  1893.  A  detailed  report  of  this 
investigation  will  be  found  in  House  Document  1008  for  the 
year  1893.  It  may,  however,  be  here  noted  that  practically 
all  the  stock  of  the  Bay  State,  Boston,  South  Boston  and  Rox- 
bury  companies  has  been  pledged  to  the  Mercantile  Trust  Com- 
pany of  New  York  as  security  for  $9,000,000  so-called  Boston 
United  Gas  bonds  "Firsts"  and  $3,000,000  Boston  United 
Gas  bonds  "  Seconds,"  and  that  the  equity,  if  any,  in  these 
stocks  belongs  now  to  the  Bay  State  Gas  Company  of  Dela- 
ware, and  is  largely  the  basis  of  the  bonds  and  $100,000,000 
of  stock  issued  by  that  company.  An  account  of  this  trust 
somewhat  more  in  detail  is  found  in  the  report  of  the  Board 
of  Gas  and  Electric  Light  Commissioners  for  1899,  pages 
31  et  seq.  Certain  important  results  of  this  quasi  consoli- 
dation may  be  here  noted.  In  the  first  place,  the  manu- 
facturing plants  of  the  South  Boston  andRoxbury  companies 
have  been  shut  down,  and  these  companies  have  bought  their 
gas  for  some  years  from  the  Bay  State  Gas  Company  of 
Massachusetts.  The  prices  paid  this  past  year  have  been  57 
cents,  delivered  in  the  holders  of  the  Roxbury  and  South 
Boston  companies.  This  price  is  very  largely  in  excess 
of  the  cost  of  manufacture  by  any  company  in  the  Com- 
monwealth, the  detailed  accounts  of  which  have  been  brought 
before  your  committee.  Nearly  all  of  the  large  and  prosper- 
ous companies  of  the  Commonwealth  have  been  putting  their 
gas  into  the  holder  at  a  cost  very  much  below  57  cents. 
Although  the  manufacturing  plants  of  the  South  Boston  and 
Roxbury  companies  have  been  rendered  idle  and  disused, 
and  their  gas  supply  has  come  from  the  Bay  State  into 
which  some  $2,000,000  of  capital  was  put  for  the  purpose  of 
making  it  a  manufacturing  company,  none  of  the  property 
previously  used  by  these  companies  for  the  manufacture  of 
gas  has  been  sold  and  the  proceeds  thereof  applied  to  the 
retirement  of  any  part  of  their  capital  stock.    The  Bay 


1900.] 


HOUSE  —  No.  1405. 


5 


State  stock,  the  investment  of  which  was  used  simply  to 
create  a  manufacturing  plant,  has  been  simply  an  ad- 
dition to  the  total  capital  stock  of  the  companies. 
Your  committee  are  of  the  opinion  that  there  has 
been  a  considerable  unnecessary  duplication  of  capital 
by  this  means,  and  that  justice  to  the  consumer  de- 
mands that  if  a  gas  company  is  to  be  permitted  to  disuse  its 
own  manufacturing  plant  and  purchase  its  gas  of  another 
company,  this  arrangement  should  be  made  so  as  not  to  im- 
pose upon  the  consumer  any  unnecessary  duplication  of  cap- 
ital. The  gas  plants  cannot  be  maintained  but  not  used 
simply  for  the  purpose  of  furnishing  a  basis  of  paying  divi- 
dends upon  capital  which  may  have  been  invested  but  is  no 
longer  used  for  the  public  benefit.  It  should  also  be  noted 
that  these  corporations  the  stocks  of  which  have  thus  been 
pledged  to  the  Mercantile  Trust  Company,  have  thereby  lost 
all  normal  relations  both  to  those  having  the  beneficial  in- 
terest therein  and  to  the  community.  In  the  ordinary  cor- 
poration the  stockholder  has  the  beneficial  interest  in  the 
property.  If  the  property  is  not  managed  to  his  satisfac- 
tion, he  endeavors  to  change  the  Board  of  Directors  and 
thus  to  get  a  satisfactory  management.  The  stockholder's 
vote  is  his  proper  and  legitimate  means  of  expressing  ap- 
proval or  disapproval  of  the  management  of  his  property, 
whether  that  approval  or  disapproval  be  directed  simply  to 
his  private  interests  or  also  takes  into  account  the  public 
obligations  of  the  public-service  corporation.  When  the 
stockholders  of  a  public-service  corporation  are  largely  resi- 
dents of  the  community  served  thereby  their  influence  is  a 
wholesome  and  generally  adequate  means  of  maintaining  a 
reasonably  efficient  and  public-spirited  service  on  the  part 
of  such  corporation. 

Under  the  Bay  State  Gas  Trust  arrangement  there  is  prac- 
tically but  one  stockholder,  —  the  Mercantile  Trust  Company 
of  New  York.  Under  the  terms  of  the  Trust  by  which  this 
trust  company  holds  these  stocks  as  security  for  the  Boston 
United  Gas  bonds,  it  is  the  duty  of  the  trust  company,  so 
long  as  there  is  no  breach  of  the  trust  agreement,  to  permit 
the  Bay  State  Gas  Company  of  New  Jersey, — the  promissor 


6 


GAS  INVESTIGATION. 


[June, 


on  the  bonds,  to  designate  the  persons  to  be  elected  direc- 
tors of  the  corporations.  The  stock  of  the  Bay  State  Gas 
Company  of  New  Jersey  until  Nov.  1,  1896,  was  owned  and 
controlled  by  the  Bay  State  Company  of  Delaware  of  which 
Mr.  J.  Edward  Addicks  was  president  and  apparently  in 
entire  control.  The  result  was  that  the  directors  of  these 
corporations  were  designated  by  the  Bay  State  Gas  Com- 
pany of  Delaware, — a  corporation  which  was  organized  for 
purely  speculative  purposes,  owned  and  controlled  by  per- 
sons who  recognized  no  duty  or  obligation  to  the  communi- 
ties served  by  the  corporations  the  capital  stock  of  which 
this  Delaware  Company  voted.  The  beneficial  interest  in 
these  corporations  was  held  by  the  persons  who  had  become 
the  purchasers  of  the  stocks  and  bonds,  the  main  beneficial 
interest,  of  course,  being  represented  by  the  holders  of  the 
Boston  United  Gas  bonds  "  Firsts,"  which  amounted  to 
$9,000,000.  These  persons  have  no  means  of  representing 
themselves  in  the  mangement  of  the  companies.  A  single 
illustration  of  this  may  suffice  :  The  trust  agreement  pro- 
vides in  effect  that  none  of  the  corporations  whose  stocks 
are  thus  pledged  shall  issue  any  obligation  or  create  any 
floating  indebtedness,  or  otherwise  encumber  the  prop- 
erty of  the  companies  to  the  impairment  or  diminution 
of  the  rights  and  interests  represented  by  the  stocks. 
In  spite  of  this  provision,  these  companies,  under  the 
management  which  represents  merely  a  possible,  but 
improbable,  equity  in  the  stocks,  have  issued  $250,000 
of  notes  of  the  Bay  State  Gas  Company  and  $275,000 
of  the  Boston  Gas  Light  Company.  Unpaid  bills  of  these 
companies  amounted  on  June  30,  1899,  for  the  Bay  State 
$143,713.32,  and  for  the  Boston  $171,127.50.  The  notes 
of  the  Bay  State  were  issued  for  an  addition  to  the  manu- 
facturing plant  of  the  Bay  State  said  to  have  been  built  by 
the  Bay  State  Gas  Company  of  Delaware.  It  is  not  apparent 
why  the  Bay  State  Gas  Company  of  Delaware  should  have 
been  made  the  contractor  for  the  construction  of  the  addi- 
tion to  the  plant  of  the  Bay  State  Gas  Company  of  Massa- 
chusetts. 

At  the  time  of  the  investigation  in  1893,  then,  the  Boston,, 
Bay  State,   South  Boston  and  Roxbury  companies  were 


1900.] 


HOUSE —  No.  1405. 


7 


under  the  management  above  sketched.  The  stock  of  tli<i 
Dorchester  Company  was  also  owned  by  the  Bay  State  Com- 
pany of  Delaware,  and  it  bought  its  gas  of  the  Bay  State 
Gas  Company  of  Massachusetts,  its  works  being  shut  down. 
At  that  time  the  Brookline  Company  was  a  comparatively 
small  corporation,  with  a  capital  stock  of  $500,000,  total 
assets  of  $1,111,985.36,  total  liabilities  of  $1,068,116.67, 
showing  a  small  surplus  of  $43,868.69,  and  it  was  selling 
about  66,000,000  feet  of  gas, — less  than  either  the  Dor- 
chester or  the  South  Boston  companies.  Its  field  was  in  the 
town  of  Brookline  and  in  the  Brighton  district  of  Boston, —  a 
sparsely  settled  territory,  not  advantageous  to  a  gas  company. 
Owing  to  a  contest  betAveen  Mr.  Rogers  or  the  Standard  Oil 
interests  of  New  York,  and  Mr.  Addicks,  the  controlling  spirit 
of  the  Bay  State  gas  trust,  the  Standard  oil  party  bought 
the  controlling  interest  of  the  Brookline  company  and  en- 
tered into  competition  in  the  Boston  field  for  the  purpose  of 
driving  Mr.  Addicks  out  of  Brooklyn  and  Buffalo,  N.  Y. 
This  competition  had  not  as  its  basis  any  reduction  of  the 
price  of  gas,  nor  furnishing  to  an  unsupplied  part  of  our 
people  lighting  facilities ;  it  was  a  speculative  movement 
pure  and  simple.  This  competition  went  on  from  early  in 
1893  until  May,  1896.  At  the  expiration  of  that  period 
the  Brookline  company  had  book  assets,  as  appears  by 
the  table  above,  of  $4,627,907.35,  and  liabilities  of  $4,931- 
503.10,  showing  a -deficit  of  $300,000.  Its  actual  assets  are 
apparently  considerably  less.  On  its  application  to  the 
Board  of  Gas  and  Electric  Light  Commissioners  in  1896  for 
authority  to  issue  another  $1,000,000  of  bonds,  the  Com- 
missioners did  not  find  assets  sufficient  in  their  opinion  to 
justify  them  in  authorizing  the  issue.  The  capital  stock  was 
then  $2,000,000;  $1,000,000  of  bonds  was  outstanding. 
The  Commissioners  authorized  the  issue  of  another  $425,- 
000,  thus  estimating  the  assets  at  $3,425,000,  when  according 
to  the  books  of  the  company  its  assets  were  $4,417,982.99. 
There  is  weighty  evidence  that  the  property  of  this  company 
is  worth  substantially  $1,000,000  less  than  its  books  would 
indicate.  The  competition  of  the  Brookline  Company  cut 
into  the  business  of  the  Boston  Company  somewhat.  For 
the  year  ending  June  30,  1899,  the  sales  of  the  Brookline 


8  GAS  INVESTIGATION.  [June, 

Company  were  690,110,000  feet.  The  Boston's  sales  had 
diminished  about  300,000,000  feet  from  the  year  ending 
June  30,  1892.  On  May  2,  1896,  the  so-called  Boston  and 
Brookline  contract  was  made.    That  contract  is  as  follows  : 

This  Agreement,  made  this  second  day  of  May,  A.D.,  1896, 
by  and  between  the  Boston  Gas  Light  Company,  a  corporation 
organized  and  existing  under  the  laws  of  the  Commonwealth  of 
Massachusetts,  and  engaged  in  the  manufacture  and  sale  of  gas  in 
the  city  of  Boston,  in  the  county  of  Suffolk,  in  said  Common- 
mealth,  hereinafter  called  the  party  of  the  first  part,  and  the  Brook- 
line  Gas  Light  Company,  a  corporation  organized  and  existing 
under  the  laws  of  said  Commonwealth  and  engaged  in  the  manu- 
facture and  sale  of  gas  in  said  city  of  Boston  and  in  the  town  of 
Brookline  in  the  county  of  Norfolk  in  said  Commonwealth,  herein- 
after called  the  party  of  the  second  part, 

Witnesseth :  That  the  parties  hereto  each  for  and  in  considera- 
tion of  the  agreements  herein  contained  on  the  part  of  the  other, 
promises,  covenants,  and  agrees  as  follows :  — 

First,  That  the  party  of  the  first  part  agrees  with  the  party  of 
the  second  part  that  the  party  of  the  first  part  will,  during  the 
term  of  twenty-five  years  from  the  second  day  of  May,  A.  D. 
1896,  receive  at  the  holder  of  the  party  of  the  first  part  on  Ferdi- 
nand Street  in  said  city  of  Boston  and  purchase,  in  each  year 
during  said  term,  from  the  party  of  the  second  part,  such  an 
amount  of  illuminating  gas  of  the  quality  and  candle-power  usually 
sold  by  the  party  of  the  second  part  to  the  retail  customers  of  the 
party  of  the  second  part  as  will,  together  with  the  sales  of  the 
party  of  the  second  part  to  other  customers,  enable  the  party  of 
the  second  part  to  pay  from  the  proceeds  of  such  total  sales  all 
expenses,  including  the  expenses  of  manufacture,  distribution, 
management,  insurance,  taxes  and  other  assessments,  mainte- 
nance, depreciation,  and  other  lawful  claims  and  expenses,  and 
interest  at  the  rate  of  five  per  cent,  per  annum  upon  all  bonds 
issued  by  the  party  of  the  second  part,  interest  at  the  rate  of  six 
per  cent,  per  annum  upon  all  promissory  notes  and  other  obliga- 
tions of  indebtedness  now  issued  by  the  party  of  the  second  part, 
interest  at  the  rate  of  four  per  cent,  per  annum  upon  all  promis- 
sory notes  and  other  obligations  of  indebtedness,  hereafter  issued 
by  the  party  of  the  second  part,  to  raise  funds  for  the  extension 
of  its  manufacturing  and  distributing  plant,  and  a  dividend  at  the 
rate  of  ten  per  cent,  per  annum  upon  all  capital  stock  now  issued 
by  the  party  of  the  second  part. 

Second,  That  the  party  of  the  first  part  agrees  with  the  party 


1900.] 


HOUSE  —  No.  1405. 


of  the  second  part  that  the  party  of  the  first  part  will  pay,  on  the 
first  business  day  of  each  month,  to  the  party  of  the  second  part, 
at  the  principal  oflice  of  the  party  of  the  second  part,  for  all  such 
gas  so  delivered  and  sold  to  the  party  of  the  first  part,  by  the 
party  of  the  second  part,  during  the  month  next  preceding  at  the 
regular  price  per  thousand  cubic  feet  charged  by  the  party  of  the 
second  part  to  the  majority  of  its  customers,  which,  however, 
shall  not  exceed  one  dollar  per  thousand  cubic  feet. 

And  the  amount  of  the  gas  which  is  to  be  received  and  pur- 
chased by  the  party  of  the  first  part  of  the  party  of  the  second 
part  during  each  month  in  said  term  shall  be  approximately  esti- 
mated and  stated  in  writing  by  the  Treasurer  of  the  party  of  the 
second  part  to  the  Treasurer  of  the  party  of  the  first  part  upon  the 
last  business  day  of  the  preceding  month,  a  due  adjustment  being 
made  at  the  end  of  each  year  to  meet  the  exact  terms  of  the  pro- 
visions of  this  contract. 

Third,  That  the  party  of  the  second  part  agrees  with  the  party 
of  the  first  part  that  it  will  allow  the  Treasurer  and  Engineer  of 
the  party  of  the  first  part  to  inspect  in  each  month  during  the  term 
of  this  agreement  at  all  reasonable  times  the  manufacturing  plant 
and  station  meter  and  books  of  account  of  the  party  of  the  second 
part  and  from  time  to  time  to  take  records  thereof. 

Fourth,  That  the  party  of  the  second  part  agrees  with  the  party 
of  the  first  part  that  it  will  render  to  the  party  of  the  first  part  a 
statement  monthly  of  all  gas  supplied  by  the  party  of  the  second 
part  to  customers,  and  a  statement  of  the  expenses  of  the  party 
of  the  second  part  during  the  preceding  month. 

Fifth,  That  the  party  of  the  second  part  agrees  with  the  party  of 
the  first  part  that  during  the  term  of  this  agreement  the  entire 
salaries  and  allowances  paid  to  the  Directors,  President,  Vice- 
President,  Treasurer,  Manager,  salaried  Counsel,  Engineer,  and 
Cashier  of  the  party  of  the  second  part  by  the  party  of  the  second 
part  shall  not  exceed  twenty  thousand  dollars  per  annum. 

In  Witness  Whereof,  the  said  parties  hereto  have  caused  this 
agreement  to  be  signed  in  their  respective  names  and  behalf,  and 
their  respective  corporate  seals  to  be  hereto  attached,  by  their 
respective  presidents  and  treasurers,  thereunto  duly  authorized 
by  their  respective  boards  of  directors,  this  second  day  of  May, 
A.D.  1896. 

Brookline  Gas  Light  Company, 

by  its  President,  Robert  Amory, 
and  its  Treasurer,  Harcourt  Amory. 

Boston  Gas  Light  Company, 

by  its  President,  J.  Edward  Addicks, 
and  its  Treasurer,  F.  P.  Addicks. 


10 


GAS  INVESTIGATION. 


[June, 


It  will  be  noted  that  this  contract  says  nothing  about 
terminating  the  competition  between  the  companies  ;  that  it 
does  not  require  the  Brookline  Company  really  to  furnish 
any  gas  to  the  Boston  Company.  No  gas  has  been  de- 
livered by  the  Brookline  Company  under  this  contract. 
Enough  money  has  simply  been  paid  from  the  treasury 
of  the  Boston  Company  into  the  treasury  of  the  Brookline 
Company  to  enable  the  Brookline  Company  to  pay  interest 
on  its  debts  and  10  per  cent,  on  its  capital.  Its  stock,  upon 
which  no  dividends  were  paid  in  the  years  ending  June  30, 
1895,  and  June  30,  1896,  thus  became  at  once  a  10  per  cent, 
stock,  and  $200,000  a  year  has  been  paid  for  the  years  end- 
ing June  30,  1897,  1898  and  1899.  About  $200,000  has 
been  paid  from  the  treasury  of  the  Boston  into  the  treasury 
of  the  Brookline  under  this  arrangement.  This  Boston  and 
Brookline  contract  was  part  of  a  larger  arrangement  made 
at  that  time  between  the  so-called  Addicks  interests,  or  the 
Bay  State  of  Delaware  interests,  and  the  Standard  Oil  in- 
terests. The  Bay  State  of  Delaware  was  to  purchase  from 
the  Standard  Oil  interests  their  entire  holdings  in  the  Boston 
gas  field,  paying  for  them  on  November  1,  1896.  This  ar- 
rangement was  also  part  of  a  still  larger  undertaking. 
Early  in  the  winter  of  1896  Mr.  Henry  M.  Whitney  applied 
to  the  Legislature  for  a  charter  for  the  purpose  of  enabling 
him  to  sell  the  gas  which  he  proposed  to  manufacture  as  a 
by-product  of  the  process  of  manufacturing  coal  bought 
from  the  Dominion  Coal  Company  of  the  Provinces  into 
coke.  It  was  claimed  that  a  great  public  benefit  would 
be  derived  by  means  of  this  charter,  and  that  the 
price  of  gas  would  thus  be  rendered  very  much  lower,  and 
that  it  would  be  practicable  for  the  community  to  use  gas 
very  largely  for  fuel  purposes.  After  this  proposition  had 
been  betore  the  Legislature  of  1896  for  some  time  an  ar- 
rangement was  made  between  all  the  large  interests  then 
represented  in  the  Boston  gas  field,  by  which  this  charter 
was  to  be  used  as  a  practical  method  of  consolidating  the 
Boston  gas  companies.  The  Boston  and  Brookline  contract 
was  a  part  of  the  arrangement  by  which  the  gas  companies 
of  Boston  were  to  be  practically  consolidated,  the  Standard 
Oil  interests  were  to  be  bought  out,  leaving  Messrs.  Addicks 


1900.] 


HOUSE  —  No.  1405. 


11 


and  Whitney  in  full  control  of  the  field.  The  veto  of  the 
original  Pipe  Line  charter  by  Governor  Wolcott  on  June  2, 
1896,  thwarted  these  plans.  But  the  Boston  and  Brookline 
contract  remained  after  the  larger  scheme  of  which  it 
was  a  part  had  gone  to  wreck.  Owing  to  a  failure 
on  the  part  of  the  Bay  State  Gas  Company  of  Delaware 
to  pay  the  sum  agreed  for  the  Standard  Oil  interests  on 
November  1,  1896,  the  old  directors  designated  by  Mr. 
Addicks  of  the  Boston,  Bay  State,  Dorchester,  South  Boston 
and  Roxbury  companies,  resigned,  and  persons  designated 
in  the  Standard  Oil  interests  were  elected  in  their  places. 
The  stock  of  the  Bay  State  gas  company  of  New  Jersey, 
which  company  was  then  in  the  possession  of  the  Bay  State 
Gas  Company  of  Delaware,  was  transferred  to  three  trus- 
tees,—  Messrs.  Henry  H.  Rogers,  John  G.  Moore  and 
Albert  C.  Burrage,  who  thus  became  the  Trustees  of  the 
voting  trust,  and  were  enabled  to  designate  directors  for 
all  the  Boston  gas  companies,  except  the  East  Boston,  Char- 
lestown  and  Jamaica  Plain,  none  of  which  had  then  come 
under  their  control. 

No  steps  were  taken  to  avail  of  the  charter  granted  the 
Massachusetts  Pipe  Line  Company  until  the  fall  of  1897. 
At  that  time  a  new  and  important  development  occurred  -in 
the  Boston  gas  field.  The  New  England  Gas  and  Coke  Com- 
pany was  formed.  This  is  an  unincorporated,  voluntary 
association,  whose  affairs  are  managed  by  a  Board  of  Trustees 
whose  powers  and  purposes  are  declared  in  a  declaration  of 
trust  dated  September  30,  1897.  The  following  description 
of  this  concern  is  taken  from  the  report  of  the  Gas  Commis- 
sioners for  1898,  pages  6  and  7  :  — 

The  New  England  Gas  and  Coke  Company  is  an  unincorporated 
voluntary  association,  whose  affairs  are  managed  by  a  board 
of  trustees  and  whose  powers  and  purposes  are  defined  in  a  decla- 
ration of  trust  dated  Sept.  30,  1897.  By  the  terms  of  this  declara- 
tion the  property  of  the  company  is  divided  into  two  hundred 
thousand  shares  of  the  par  value  of  fifty  dollars  each.  Its 
property  is  to  be  held  and  its  affairs  managed  by  a  board  of 
trustees,  who  are  empowered  to  "  employ  the  trust  property  .  .  . 
in  manufacturing,  buying,  selling  and  dealing  in  coal,  oil,  coke, 
gas  and  all  the  products  thereof,  and  in  business  similar  thereto, 


12 


GAS  INVESTIGATION. 


[June, 


including  electrical  business  of  all  kinds."  The  trustees  are 
also  empowered  "  to  buy  any  property  "  (including  shares  and  bonds 
issued  under  the  declaration  of  trust),  "real  and  personal,  and 
any  rights,  franchises,  privileges  or  securities  which  the  con- 
duct of  said  business  may,  in  their  judgment,  require,  and  may, 
in  their  judgment,  tend  to  promote  its  successful  prosecution 
and  the  interest  of  the  shareholders,  and  to  hold,  use  or  sell 
the  same,  or  any  part  thereof,  at  their  discretion  ; "  "to  borrow 
money  for  the  business  or  for  the  purchase  of  the  property 
herein  authorized,  to  give  notes  or  other  obligations  therefor, 
and  to  pledge  or  mortgage  all  or  any  part  of  the  trust  property 
to  secure  such  notes  and  obligations  or  any  contract  entered  into 
in  the  course  of  the  execution  of  this  trust ;"  "to  make  a  lease  or 
leases  of  the  trust  property  or  any  part  thereof."  Acting  under 
these  powers,  the  company  has  executed  a  mortgage  or  deed  of 
trust  to  secure  its  bonds  or  certificates  of  indebtedness  for  the 
total  amount  of  $17,500,000  par  value,  being  17,500  obligations 
of  $1,000  each,  to  the  Central  Trust  Company  of  New  York. 
Thirty-five  hundred  of  these  obligations  are  not  to  be  issued  until 
other  property  is  acquired,  but  14,000  ($14,000,000)  are  to  be 
issued  at  once,  for  which  the  following  properties  are  named  in 
the  mortgage  as  security  :  certain  real  estate  in  the  city  of  Chel- 
sea and  town  of  Revere  in  this  Commonwealth  ;  a  certain  con- 
tract with  the  Dominion  Coal  Company ;  licenses  from  the  Otto 
Coke  and  Chemical  Company  and  the  United  Gas  and  Coke 
Company  to  use  certain  patent  processes  for  the  manufacture  of 
gas  and  coke,  including  those  known  as  the  Otto-Hoffman  patents  ; 
Boston  United  Gas  bonds, first  series, of  the  par  value  of  $1 ,000,000  ; 
18,500  shares  of  the  capital  stock  of  the  Brookline  Gas  Light 
Company;  5,176  shares  of  the  capital  stock  of  the  Dorchester 
Gas  Light  Company ;  1 ,382  shares  of  the  capital  stock  of  the 
Jamaica  Plain  Gas  Light  Company  ;  certificates  of  indebtedness  of 
the  Brookline  Gas  Light  Company  of  the  face  value  of  $1,615,000 
all  the  right,  title  and  interest  of  the  New  England  Gas  and  Coke 
Company  in  and  to  the  entire  capital  stock  of  the  Massachusetts 
Pipe  Line  Gas  Company,  with  the  right  of  subscription  thereto, 
and  the  right  to  any  and  all  increase  of  stock  of  said  company 
hereafter  issued. 

The  bonds  referred  to  are  dated  Dec.  1,  1897,  mature  Dec.  1, 
1937,  and  bear  interest  at  the  rate  of  five  per  cent,  per  annum. 

This  curious  and  anomalous  organization  was  made  possi- 
ble by  the  words  in  the  Pipe  Line  charter  authorizing  it  to 
buy  and  to  deal  in  gas.    The  capital  stock  of  the  Pipe  Line 


1900.] 


HOUSE -No.  1405. 


13 


was  thus  paid  in  out  of  the  proceeds  ot  the  so  called  bonds 
of  the  Coke  Company.  Its  officers  are  prac.ucaUy  t he  game  ; 
its  control  is  certainly  the  same.  The  Cdke  Company  sold 
a  part  of  its  holding  in  land  to  th$  Ptpp'  'Line ''Company  and 
erected  thereon  a  holder  and  purify iiig  house.  '  Ttie  same 
set  of  men  do  work  for  both  concerns';  their  o  dices  are  the 
same  ;  in  all  practical  effects  the  two  concerns  are  identical. 
The  Coke  Company  denies  that  it  is  in  any  manner  subject 
to  the  jurisdiction  of  the  Gas  Commission  or  to  any  of  the 
provisions  of  law  applicable  to  gas  companies.  The  pro- 
perty upon  which  it  has  issued  $35,000,000  of  stocks  and 
bonds  may  be  worth  $7,000,000  or  $8,000,000.  It  is  a 
stock-watering  enterprise  on  a  gigantic  scale.  On  Decem- 
ber 1,  1897,  as  a  part  of  the  initiation  of  this  scheme,  con- 
tracts were  entered  into  between  the  Pipe  Line  Company 
and  the  various  Boston  gas  companies,  a  copy  of  one  of 
which  is  as  follows  :  — 

Agreement  made  this  third  day  of  December,  1897,  by  and 
between  the  Massachusetts  Pipe  Line  Gas  Company,  a  corpora- 
tion duly  established  under  the  laws  of  the  Commonwealth  of 
Massachusetts  hereinafter  called  the  Pipe  Line  Company,  party  of 
the  first  part,  the  Jamaica  Plain  Gas  Light  Company,  a  corpora- 
tion also  duly  established  under  the  laws  of  said  Commonwealth 
hereinafter  called  the  Gas  Company,  party  of  the  second  part,  and 
the  trustees,  styling  themselves  The  New  England  Gas  and  Coke 
Company,  hereinafter  called  the  New  England  Company,  and 
acting  herein  under  a  declaration  of  trust  dated  Sept.  30,  1897, 
and  filed  with  the  American  Loan  and  Trust  Company  of  Boston 
in  said  Commonwealth,  party  of  the  third  part. 

Whereas,  Said  Pipe  Line  Company  is  authorized  to  sell  and  de- 
liver fuel  or  illuminating  gas  to  any  gas  company  or  to  any  town 
or  city  authorized  by  law  to  distribute  gas,  and  any  gas  company 
and  any  such  city  or  town  is  authorized  to  contract  for  the  pur- 
chase of  gas  from  said  Pipe  Line  Company  for  such  term  of  years, 
and  on  such  conditions  as  may  be  mutually  agreed  upon  —  subject 
to  certain  conditions  in  the  charter  of  said  Pipe  Line  Company 
specifically  set  forth  ;  and 

Whereas,  The  said  Gas  Company,  under  and  by  virtue  of  this 
contract,  intends  and  expects  to  supply  itself  with  gas  at  prices 
making  the  cost  of  said  gas  to  the  Gas  Company  less  than  the  cost 
at  which  it  can  otherwise  obtain  the  same  either  by  manufacture 
or  purchase ;  and 


14 


GAS  INVESTIGATION. 


[June, 


Whereas,  The  New  England  Company  is  about  to  actively 
engage  in  the  manufacture  of  coke,  and  in  connection  therewith  in 
the  manufacture  of  gas  for  illuminating,  fuel  and  power  purposes, 
and  propose*  -to  deliver  to  the  said  Pipe  Line  Company  all  such  gas 
so  niaUufactared  as-  may  be  necessary  to  enable  the  said  Pipe  Line 
Company  ..to,-  execute  afry  contracts  it  may  make  for  the  sale  of 
gas  and  proposes  further  to  guarantee  the  execution  of  any  such 
contracts  ; 

Now,  Therefore,  this  contract  witnesseth  as  follows,  to  wit : 

1.  At  any  time  within  eighteen  months  from  the  date  hereof 
said  Pipe  Line  Company  may  notify  the  Gas  Company  that  it  is 
prepared  to  deliver  one  million  cubic  feet  of  coal  gas  per  day, 
purified  in  accordance  with  legal  requirements,  and  capable  of  en- 
richment to  a  merchantable  gas  of  twenty-five  candle  power,  and, 
at  the  end  of  ninety  days  from  the  giving  of  such  notice,  the  said 
Gas  Company  shall  thereafter  anol  during  the  term  of  this  contract 
buy  and  receive  from  said  Pipe  Line  Company  delivered  at  the 
holder  or  mains  of  said  Gas  Company,  one  hundred  thousand 
cubic  feet  of  coal  gas  per  day. 

2.  Said  Gas  Company  shall  pay  to  said  Pipe  Line  Company  for 
each  one  thousand  cubic  feet  of  gas  delivered  under  the  terms  of 
this  contract  the  sum  of  twenty  cents,  provided  the  same,  if  for 
illuminating  purposes,  shall  have  a  candle-power  of  twelve  candles, 
or  provided  the  same,  if  for  fuel  or  power  purposes,  shall  have 
five  hundred  and  eighty  British  thermal  heat  units  per  foot  of  gas 
so  delivered. 

3.  If  any  gas  delivered  under  this  contract  for  illuminating 
purposes  shall  have  a  candle-power  of  less  than  twelve  candles, 
there  shall  be  allowed  to  the  Gas  Company  a  discount  equal  to  the 
cost  of  oil  or  other  enricher  for  enriching  such  gas  so  delivered  in 
twelve-candle  power. 

4.  If  any  gas  delivered  under  this  contract  for  fuel  or  power 
purposes  shall  have  a  heating  power  of  less  than  five  hundred  and 
eighty  British  thermal  heat  units  per  cubic  foot  of  gas,  then  there 
shall  be  allowed  to  the  Gas  Company  a  discout  in  proportion  to 
such  deficiency.  The  heating  power  of  all  gas  delivered  for  fuel 
or  power  purposes  shall  be  determined  by  averaging  in  each  month 
the  heating  power  of  all  gas  in  such  month  delivered.  Said  Pipe 
Line  Company  shall  not  deliver  and  said  Gas  Company  shall  not 
be  obliged  to  receive  gas  for  fuel  or  power  purposes  having  less 
than  five  hundred  and  sixty  heat  units  per  cubic  foot  of  gas. 

5.  Said  Gas  Company  shall,  on  or  before  the  last  day  of  each 
month,  pay  said  Pipe  Line  Company  for  all  gas  delivered  to  the 


1900.] 


HOUSE  —  No.  1405. 


15 


Gas  Company  during  the  month  then  next  preceding  at  the  prices 
aforesaid. 

f  6.    Said  Gas  Company  shall,  on  the  twenty-fifth  day  of  each 

month,  notify  said  Pipe  Line  Company  of  the  amount  of  gas  which 
it  will  probably  require  during  each  day  of  the  next  succeeding 
month  for  any  purposes. 

Whenever  said  Pipe  Line  Company  shall  have  command  of  gas  to 
an  amount  sufficient  to  warrant  it  in  notifying  the  Gas  Company 
that  it  is  prepared  to  supply  the  Gas  Company  with  all  the  gas  the 
latter  company  may  need  in  its  business,  it  may  give  such  notice, 
and  upon  the  expiration  of  ninety  days  thereafter,  the  Gas  Com- 
pany shall  buy  and  receive  deliverable  at  its  holder  or  mains,  and 
shall  pay  therefor  at  the  rates  and  in  the  manner  hereinbefore 
specified,  all  of  the  gas  of  the  descriptions  aforesaid  which  it  can 
use,  directly  or  as  the  basis  for  finished  enriched  gas,  in  its  business. 

7.  If  said  Gas  Company  shall  at  any  time  during  the  term  of 
this  contract  sell  or  distribute  any  gas  other  than  gas  furnished  by 
said  Pipe  Line  Company,  the  latter  Company  being  able  and 
willing  to  furnish  gas  as  required  by  this  contract  and  having 
given  notice  as  required  above,  the  Gas  Company  shall  pay  to  said 
Pipe  Line  Company  ten  cents  for  each  one  thousand  cubic  feet  of 
gas  so  sold  or  distributed,  in  which  shall  not  be  included,  however, 
gas  for  enriching,  or  gas  to  provide  for  temporary  variations  in 
output. 

If  after  said  Pipe  Line  Company  has  given  notice  to  the  Gas 
Company  as  hereinbefore  provided  of  its  ability  and  willingness  to 
furnish  gas  as  aforesaid,  it  shall  negligently  fail  to  furnish  such 
gas  as  the  Gas  Company  shall  give  notice  that  it  shall  require,  and 
the  Gas  Company  is  obliged  by  reason  of  such  negligence  to  man- 
ufacture gas  to  supply  the  demand  of  its  customers,  then  said  Pipe 
Line  Company  shall  pay  to  the  Gas  Company  ten  cents  for  each 
one  thousand  cubic  feet  of  gas  which  said  Gas  Company  shall  be 
obliged  to  manufacture. 

-8.  It  is  understood  that,  for  the  purposes  of  economy,  gas  is 
now  purchased  and  sold  between  the  Gas  Company  and  certain 
other  corporations  engaged  in  selling  and  distributing  gas,  and 
that  such  purchase  and  sale  by  any  of  said  corporations  of  gas 
purchased  from  said  Pipe  Line  Company  shall  not  be  considered 
a  violation  of  this  contract. 

9.    The  New  England  Company  shall,  within  months  of 

the  date  hereof,  begin  the  erection  of  a  plant  in  the  city  of  Boston 
or  its  vicinity  of  the  capacity  of  at  least  one  million  cubic  feet  of 
coal  gas  per  day,  and  shall  complete  and  put  the  same  in  operation 


16 


GAS  INVESTIGATION.  [June, 


with  all  reasonable  despatch  ;  shall  from  time  to  time  increase 
said  plant  or  erect  new  plants  so  far  as  such  increase  or  erection 
may  be  necessary  to  enable  it  to  carry  out  the  provisions  of  this 
contract ;  shall  deliver  to  said  Pipe  Line  Company  at  the  works  of 
the  New  EDgland  Company  such  quantities  of  coal  gas  of  such 
quality  as  may  be  called  for  by  any  and  all  contracts  which  the 
Pipe  Line  Company  may  make  with  any  gas  company  or  any  city 
or  town ;  shall  do  all  acts  and  things  necessary  and  proper  to 
enable  said  Pipe  Line  Company  to  duly  fulfil  any  and  all  such 
contracts  ;  and  hereby  gnarantees  the  faithful  performance  by  said 
Pipe  Line  Company  of  all  the  provisions  of  said  contracts  :  pro- 
vided, however,  that  this  contract  is  made  by  the  New  England 
Company  conformably  to  the  terms  and  conditions  of  the  Declara- 
tion of  Trust  hereinbefore  referred  to  and  hereby  made  part 
hereof,  and  that  neither  any  trustee  acting  under  said  declaration 
nor  any  shareholder  entitled  thereunder  assumes  or  subjects  him- 
self to  any  personal  liability  by  reason  of  this  contract  or  of  any- 
thing done  or  omitted  to  be  done  thereunder. 

10.  If  the  Gas  Company  shall  at  any  time  satisfy  the  other 
parties  hereto  that  it  can  permanently  and  continuously  supply 
itself  with  gas  by  the  manufacture  thereof  at  prices  lower  than 
those  stipulated  herein,  such  prices  shall  be  so  reduced  that  the 
Gas  Company  shall  obtain  its  supply  under  this  contract  as  eco- 
nomically as  it  is  practicable  to  obtain  it  by  itself  manufacturing 
the  same  :  provided,  however,  that  the  prices  herein  established 
shall  continue  for  a  period  of  ten  years  from  the  time  when  gas  is 
furnished  by  the  Pipe  Line  Company  under  this  contract,  and  that 
any  prices  revised  as  herein  provided  shall  not  be  changed  for  five 
years  after  such  revision  ;  and  that  if  the  parties  cannot  agree  as 
to  a  reduction  of  prices  or  as  to  the  propriety  thereof  such  matters 
in  issue  shall  be  referred  to  three  arbitrators,  one  chosen  by  the 
Gas  Company  and  one  by  the  Pipe  Line  Company,  or  if  either 
shall  neglect  or  fail  so  to  choose,  one  by  the  Board  of  Gas  Com- 
missioners, and  the  third  by  the  two  so  chosen,  the  award  of  whom, 
or  a  majority  of  whom,  shall  be  final  and  binding  upon  each  of  the 
parties  hereto  for  a  period  of  five  years  from  the  date  of  said 
award. 

11.  This  contract  enures  to  and  is  binding  upon  the  represen- 
tatives and  successors  of  the  respective  parties,  and  shall  continue 
in  force  for  a  term  of  fifty  years  from  the  date  hereof. 

In  Witness  Whereof,  the  said  parties  have  caused  their  respec- 
tive seals  to  be  hereto  affixed  and  these  presents  to  be  executed 
by  their  respective  officers  thereunto  duly  authorized  the  day  and 
year  first  above  written. 


1900.J 


HOUSE  —  No.  1405. 


17 


The  contracts  between  the  pipe  line  and  the  other  com- 
panies are  precisely  the  same,  except  that  the  amounts  of 
gas  to  be  taken  at  the  outset  slightly  vary.    To  all  of  these 
contracts  the  New  England  Gas  and  Coke  Company  is  a 
party.    All  of  the  gas  companies  in  Boston,  except  the  East 
Boston  and  the  Charlestown,  have  thus  agreed  to  take  all 
their  gas  from  the  Coke  Company  works,  through  the  pipe 
line,  so  soon  as  a  sufficient  amount  is  manufactured  and  the 
required  notice  is  given.    Coke  ovens  have  been  erected, 
and  in  December,  1899,  gas  first  began  to  be  supplied  from 
these  works  in  Everett.    The  manufacturing  works  of  the 
Jamaica  Plain  company  have  been  shut  down ;  about  nine- 
tenths  of  the  gas  of  the  Brookline  company  is  being  supplied 
from  these  works,  and  some  quantities  to  the  Boston  and 
Dorchester  companies.    On  the  evidence,  the  capacity  of 
the  works  is  now  about  two-thirds  of  the  annual  consump- 
tion of  all  the  Boston  companies.    While  the  written  con- 
tracts above  set  forth  provide  that  this  gas  shall  be  sold  by 
the  pipe  line  from  the  coke  works  to  the  various  gas  com- 
panies at  the  price  of  20  cents  for  12  candle-power  gas, 
the  gas  actually  delivered  is  said  to  be  of  18  or  19  candle- 
power,  and  the  prices  charged  to  the  companies  under 
the  direct  control  of  the  coke  company  are  30  cents  per 
thousand  cubic  feet.    The  Boston  Gas  Light  Company  has 
refused  to  pay  in  excess  of  25  cents  per  thousand  feet,  under 
the  advice  of  counsel.    The  ground  of  this  objection  is  that 
the  charter  of  the  Pipe  Line  Company  does  not  permit  it  to 
sell  gas  to  any  gas  company  at  a  price  in  excess  of  25  cents. 
This  ground  seems  to  your  committee  well  taken.  There 
is  no  doubt  that  the  Pipe  Line  chapter  was  obtained  on  the 
assurance  of  its  promoters  that  the  price  of  gas  to  consumers 
would  be  very  much  reduced.   There  is  no  doubt  that  the  Leg- 
islature did  not  intend  to  permit  competition  and  duplication 
of  capital  in  the  gas  companies  except  with  the  assurance 
that  the  price  of  gas  should  be  reduced,  hence  the  provision 
in  the  Pipe  Line  charter  that  on  sales  to  other  companies 
the  price  should  not  exceed  20  cents  per  thousand  cubic 
feet  for  gas  of  580  British  thermal  units,  and  not  exceeding 
5  cents  additional  for  gas  of  the  candle-power  required  by 
law,  within  the  five  mile  limit  of  the  State  House  appli- 


18 


GAS  INVESTIGATION.  [June, 


cable  to  the  gas  companies  now  under  consideration.  If  the 
Pipe  Line  Company  is  relieved  from  the  limitation  of  price 
in  its  charter  simply  by  selling  gas  of  one  or  two  candle- 
power  above  the  candle-power  required  by  law  (which  is 
16),  it  may  then,  under  the  speculative  management  which 
has  gotton  control  of  several  of  the  Boston  gas  companies, 
fix  any  price  it  pleases  to  consumers  in  Boston.  If  it  has  or 
can  obtain  control  of  the  Boston,  Bay  State,  South  Boston 
and  Roxbury  companies,  as  it  now  has  control  of  the  Dor- 
chester, Jamaica  Plain  and  Brookline  companies,  it  will  be 
enabled  to  sell  2,500,000,000  feet  of  gas  per  year  at  such 
price  as  it  chooses  to  fix.  If  contracts  for  the  sale  of  gas 
by  the  Pipe  Line  at  prices  in  excess  of  25  cents  are  valid 
contracts,  their  obligation  cannot  be  impaired  under  the  con- 
stitution of  the  United  States,  and  the  legislature  is  power- 
less. Your  committee  are  of  the  opinion  that  the  sales 
from  the  Pipe  Line  Company  to  the  various  companies  at 
prices  in  excess  of  25  cents,  are  violations  of  law,  contrary 
to  public  policy,  and  that  the  public  welfare  absolutely  de- 
mands that  these  sales  should  be  effectually  prohibited  and 
that  the  limitation  in  the  Pipe  Line  charter  of  a  price  of  25 
cents  for  sales  to  other  gas  companies  should  be  made 
effectual. 

For  15  years  the  Commonwealth  has  been  endeavoring  to 
regulate  public-service  corporations  by  commission,  and  to 
exclude  competition.  If  the  scheme  now  being  operated 
by  the  New  England  Gas  and  Coke  Company  by  means  of 
the  Pipe  Line  charter  is  permitted  to  go  unchecked,  both 
competition  and  regulation  would  have  been  excluded,  and 
the  Boston  gas  consumers  would  be  subject  to  the  mercies 
of  an  unregulated  monopoly.  The  situation  is  critical. 
None  of  the  previous  attempts  to  exploit  these  companies 
have  involved  so  dangerous  an  encroachment  upon  the  rights 
of  the  consumers,  or  have  promised  so  much  of  extortion 
from  the  gas  consumers.  This  New  England  Gas  and  Coke 
Company,  —  an  association  of  eleven  trustees,  nine  of  whom 
are  non-residents  of  this  Commonwealth,  deny  any  account- 
ability to  our  laws  or  regulating  commission,  controlling  the 
Pipe  Line  charter  granted  by  the  Legislature  for  the  purpose 
of  cheapening  gas,  are  now  attempting  by  and  through  this 


1900.] 


HOUSE  —  No.  1405. 


19 


charter  to  set  at  defiance  every  one  of  the  principles  hitherto 
relied  upon  to  give  the  consumer  a  fair  product  at  a  fair 
price. 

In  regard  to  that  portion  of  the  order  wherein  your  Com- 
mittee is  ordered  to  report  if  there  has  been  any  violation 
of  any  of  the  laws  of  this  Commonwealth  by  any  corporation 
or  association,  your  Committee  reports  that  the  Boston  and 
Brookline  contract  is  a  violation  of  law.  That  it  is  such 
violation  seems  too  clear  to  need  argument.  In  the 
case  of  Davis  v.  Old  Colony  R.R.,  131  Mass.  258,  our 
Supreme  Court  held  that  an  arrangement  made  by  the 
Railroad  Company  to  contribute  to  the  Peace  Jubilee  fund 
was  illegal  and  would  not  be  enforced.  It  is  elementary  that 
corporations  have  only  those  powers  which  are  specially  given 
them  by  their  charters.  The  Boston  Gas  Light  Company  and 
the  Brookline  Gas  Light  Company  were  organized  for  the  pur- 
pose of  manufacturing  and  selling  gas.  Neither  was  organized 
for  the  purpose  of  earning  money  for  the  benefit  of  the  stock- 
holders of  the  other.  If  the  Boston  Gas  Light  Company  may 
illegally  pay  from  the  treasury  of  its  company  into  the 
treasury  of  the  Brookline  Company  moneys  desired  by 
that  company  to  pay  a  dividend  upon  its  stocks,  any  gas 
company  may  make  a  gift  to  any  person  or  corporation  at 
the  will  of  its  directors.  If  a  gas  company  may  give  away 
its  assets,  it  may  so  cripple  itself  as  to  be  entirely  unable  to 
perform  its  public  duties.  As  the  Board  of  Gas  and  Electric 
Light  Commissioners  have  already  denounced  this  contract 
as  an  unconscionable  one,  contrary  to  public  policy,  and 
recommended  that  it  be  abrogated  (see  their  Report  for 
1898,  page  10)  it  may  fairly  be  assumed  that  if  given  power 
this  Board  would  order  the  contract  to  be  abrogated.  We 
recommend  that  it  be  abrogated,  and  we  recommend  the 
passage  of  an  act  which  shall  provide  that  no  contract  be- 
tween gas  companies  shall  be  valid  unless  the  same  be  first 
approved  by  the  Board  of  Gas  and  Electric  Light  Commis- 
sioners. 

There  is  a  third  violation  of  law  which  in  the  judgment  of 
your  Committee  the  public  interest  demands  to  have  reme- 
died. The  New  England  Gas  &  Coke  Company,  as  above  set 
forth,  denies  any  accountability  to  the  Gas  Commission  or  to 


20 


GAS  INVESTIGATION.  [June, 


the  laws  applicable  to  gas  companies  in  this  Commonwealth. 
It  has  issued  $17,500,000  of  bonds  not  under  the  provision 
of  acts  of  1885,  chapter  346,  and  the  other  provisions  appli- 
cable to  gas  companies.  The  proceeds  of  these  bonds  have 
not,  as  required  by  law,  been  applied  to  the  payment  of 
obligations  incurred  for  the  enlargement  and  extension  of  the 
works  and  the  purchase  of  real  estate  for  the  use  of  the  com- 
pany. They  have  in  large  part  been  applied  to  the  payment 
of  the  capital  stock  of  the  Pipe  Line,  to  the  purchase  of 
stock  of  the  Jamaica  Plain  and  Brookline  companies  and  of 
Boston  United  Gas  bonds.  Not  only  has  this  company  thus 
violated  the  laws  of  the  Commonwealth,  but  its  entire 
scheme  is  one  which  in  the  judgment  of  your  Committee  is 
contrary  to  public  policy,  certain  to  work  great  injury  both 
to  the  investing  public  and  to  the  gas  consuming  public. 
Chapter  476  of  the  acts  af  1894  is  as  follows  :  — 

1  Section  1.    If  a  foreign  corporation  which  owns  or 

2  controls  a  majority  of  the  capital  stock  of  a  domestic 

3  street  railway,  gaslight,  or  electric  light  corporation, 

4  shall  hereafter  issue  stock,  bonds  or  other  evidences  of 

5  indebtedness,  based  upon  or  secured  by  the  property, 

6  franchise  or  stock  of  such  domestic  corporation,  unless 

7  such  issue  is  authorized  by  the  law  of  this  Common- 

8  wealth,  the  supreme  judicial  court,  sitting  in  equity, 

9  may  in  its  discretion  dissolve  such  domestic  corporation. 

10  Nothing  contained  in  this  act  shall  be  construed  as  affect- 

11  ing  the  right  of  corporations,  officers  and  agents  there- 

12  of,  to  issue  bonds  and  stocks  in  fulfilment  of  contracts 

13  now  existing. 

1  Section  2.    It  shall  be  the  duty  of  the  attorney-gen- 

2  eral,  whenever  he  is  satisfied  that  such  issue  has  been 

3  made,  to  institute  proceedings  in  said  court  for  the  dis- 

4  solution  of  such  domestic  corporation  and  the  proper 

5  disposition  of  its  assets. 

If  it  is  obnoxious  to  sound  public  policy  to  permit  a  for- 
eign corporation  to  issue  stocks  and  bonds  based  upon  or 
secured  by  the  stock  of  domestic  corporations,  it  is  cer- 


1900.] 


HOUSE  — No.  1405. 


21 


tainly  obnoxious  to  sound  public  policy  to  permit  a  syndicate 
to  do  it.  The  purpose  of  this  re-capitalization  is  in  all  cases 
to  induce  the  investing  public  to  purchase  stocks  and  bonds 
supposed  to  be  based  upon  the  earning  power  of  the  public- 
service  corporation  far  in  excess  of  ordinary  interest  rates. 
When  these  securities  have  once  been  placed,  then  the  Leg- 
islature is  met  with  the  claim  that  bona  fide  investors  would 
be  injured  by  a  reduction  of  rates,  and  that  therefore  what 
would  otherwise  be  extortionate  rates  must  be  permitted  to 
continue.  This  New  England  Gas  &  Coke  Company  has 
contracts  by  which  it  proposes  shortly  to  manufacture  the  en- 
tire gas  supply  of  Boston.  It  needs  no  argument  to  show 
that  it  is  inconsistent  with  public  interest  that  the  company 
manufacturing  all  the  gas  of  this  metropolitan  district  should 
be  freed  from  all  the  statutory  obligations  and  regulating 
supervision  applicable  to  other  gas  companies. 

In  regard  to  that  portion  of  the  order  which  directs  us  to 
report  the  gross  and  the  net  cost  of  the  production  and  dis- 
tribution of  gas,  together  with  all  details  showing  how  such 
cost  and  prices  are  arrived  at,  your  Committee  has  to  report 
the  following  resolution,  which  was  adopted  by  your  Com- 
mittee on  May  15,  1900,  by  a  vote  of  7  to  5,  3  members  of 
the  Committee  being  absent,  the  vote  subsequently  standing 
at  another  meeting  7  to  7,  one  member  not  voting. 

Whereas  the  New  England  Gas  and  Coke  Company,  an 
association  of  individuals,  is  now  manufacturing  a  large  part 
of  the  gas  sold  in  the  city  of  Boston,  and  is  selling  the  same 
through  companies  under  its  control ;  and 

Whereas  said  New  England  Gas  and  Coke  Company  has 
stated  that  it  owns  or  controls  practically  all  the  gas  com- 
panies in  the  city  of  Boston,  and  that  it  earns  or  will  earn 
$1,298,500  net  per  annum,  of  which  all  but  $248,000  comes 
from  the  sale  of  gas  in  Boston  ;  and 

Whereas  the  aforesaid  income  of  the  New  England  Gas  and 
Coke  Company  can  be  derived  only  from  the  control  of 
practically  all  the  gas  companies  doing  business  in  Boston ; 
and 

Whereas  said  New  England  Gas  and  Coke  Company  has 
such  control  of  certain  gas  companies  of  Boston  that  no  in- 
quiry can  be  effectual  unless  said  New  England  Gas  and 


22 


GAS  INVESTIGATION.  [June, 


Coke  Company  can  be  made  to  be  subservient  to  the  laws  of 
this  Commonwealth ;  and 

Whereas  said  association  refuses  to  submit  its  books  to 
the  examination  of  this  committee,  and  refuses  to  inform 
this  committee  regarding  the  cost  of  the  production  of  the  gas 
manufactured  by  it,  and  a  fair  return  on  the  capital  invested 
by  it  in  the  manufacture  of  said  gas,  and  contends  that,  not 
being  a  corporation  it  is  beyond  the  control  of  the  laws  of 
this  Commonwealth  ;  now  therefore 

Voted:  That  unless  and  until  said  association  is  thor- 
oughly investigated,  it  is  impossible  to  report  to  the  Legis- 
lature the  cost  of  gas  in  Boston  ;  that  we  cannot  recommend 
the  passage  of  any  act  compelling  any  reduction  in  the  price 
of  gas  in  said  city  until  said  investigation  has  been  made  or 
until  the  New  England  Gas  and  Coke  Company  has  been 
brought  under  the  laws  of  this  Commonwealth  relating  to 
gas  companies. 

Voted:  That  we  recommend  to  the  Legislature  the  pas- 
sage of  the  following  act :  — 

An  Act  Relative  to  the  Sale  of  Gas  in  the  City  of  Boston. 

Be  it  enacted,  etc. 

1  Section  1.    After  the  first  day  of  January,  in  the  year 

2  nineteen  hundred  and  one,  no  gas  for  heating  or  illumi- 

3  nating  purposes  shall  be  sold  in  the  city  of  Boston,  ex- 

4  cepting  gas  manufactured,  distributed  and  sold  by  a  cor- 

5  poration,  or  corporations,  which  have  complied  with  the 

6  lawTs  of  Massachusetts  relating  to  gas  companies  and  to 

7  the  requirements  of  the  board  of  gas  and  electric  light 

8  commissioners. 

1  Section  2.    The  Supreme  Judicial  Court  and  the 

2  Superior  Court  shall  each  of  them  have  jurisdiction  in 

3  equity  at  the  suit  of  the  attorney-general  or  of  any  ten 

4  citizens  of  Boston  to  enjoin  any  and  every  person  and 

5  corporation  from  selling  any  gas  for  heating  or  illuminat- 

6  ing  purposes  in  the  city  of  Boston  after  the  first  day  of 

7  January  in  the  year  nineteen  hundred  and  one,  excepting 

8  gas  which  has  been  manufactured  by  a  corporation  which 

9  has  complied  with  the  laws  of  Massachusetts  relating  to 
10  gas  companies. 


1900.] 


HOUSE  —  No.  1405. 


23 


1  Section  3.    Any  person  or  association  now  engaged 

2  in  the  business  of  manufacturing  gas  which  is  sold  in 

3  Boston  may,  within  six  months  from  the  date  of  the  pos- 

4  sage  of  this  act,  organize,  or  cause  to  be  organized,  a 

5  corporation  for  the  purpose  of  continuing  the  manufaet- 

6  uring  business  heretofore  carried  on  by  such  person  or 

7  association,  including  the  business  of  manufacturing  gas 

8  and  for  other  manufacturing  purposes.    All  existing  laws 

9  relating  to  gas  companies  shall  apply  to  such  corporation, 

10  excepting  that  the  capital  stock  thereof  shall  not  be 

11  limited  to  five  hundred  thousand  dollars. 

1      Section  4.    This  act  shall  take  effect  upon  its  passage. 

It  seems  to  your  Committee  that  there  are  but  three  pos- 
sible courses  open  to  the  Legislature  :  — 

The  first  is  inaction  ;  but  to  take  that  course  is  merely  to 
shirk  the  responsibility  clearly  presented  and  to  leave  the 
unsolved  problem  to  future  legislatures  after  the  situation 
has  become  more  involved  as  the  securities  of  the  New 
England  Gas  and  Coke  Company  gradually  pass  from  their 
creators  to  the  innocent  investing  public.  To  postpone 
action  to  the  injury  of  the  public  seems  too  cowardly  to  be 
considered. 

The  second  course  is  to  enact  new  laws  or  change  present 
ones  so  that  the  New  England  Gas  and  Coke  Association,  its 
promoters  and  its  owners,  will  be  greatly  benefited  at  the 
expense  of  all  the  citizens  of  our  State  who  are  in  any  way 
interested  other  than  as  security  holders  of  the  New  England 
Gas  and  Coke  Association. 

The  third  course  is  to  enact  new  laws  or  change  existing 
ones  in  a  way  that  will  greatly  benefit  all  those  citizens  of 
Massachusetts  who  are  in  any  way  interested  as  gas  con- 
sumers of  Boston,  as  security  holders  of  any  of  the  gas  com- 
panies of  Boston,  or  as  security  holders  of  any  of  the  cor- 
porations existing  under  the  laws  of  Massachusetts  whose 
welfare  is  dependent  upon  the  equal  and  impartial  adminis- 
tration of  our  laws,  even  though  the  enactment  of  said  new 
laws  or  said  change  in  existing  laws  should  work  injury  to 
the   New  England  Gas  and  Coke  Association.    In  other 


24 


GAS  INVESTIGATION.  [June, 


words,  there  are  only  three  things  possible  for  us  to  do  :  (1) 
nothing;  (2)  something  that  will  benefit  the  New  England 
Gas  and  Coke  Association  to  the  injury  of  all  others ;  or  (3) 
something  that  will  help  all  others  while  possibly  injuring 
the  New  England  Gas  and  Coke  Association.  It  is  this 
actual  condition  which  confronts  us,  and  it  seems  to  us  to 
be  the  duty  of  the  Legislature  squarely  and  honestly  first 
to  decide  which  of  the  three  things  it  intends  to  do.  It  can 
be  nothing  but  dishonest  to  present  a  bill  which  on  its  face 
pretends  to  do  one  of  the  three  while  in  its  working  it  will 
not  accomplish  that  end. 

It  may  be  superficially  considered  that  there  is  a  fourth 
course,  viz.  :  to  sanction  the  New  England  Gas  &  Coke 
Company's  past  and  merely  provide  that  in  future  it  shall  be 
subject  to  the  supervision  of  the  Board  of  Gas  and  Electric 
Light  Commissioners.  A  careful  consideration  of  this  sug- 
gestion will  show,  however,  that  it  clearly  falls  under  the 
second  category.  The  New  England  Gas  &  Coke  Company 
has  in  the  form  of  a  trust  issued  securities  without  super- 
vision and  in  evasion  of  the  corporation  laws  of  Massa- 
chusetts. It  is  not  unfair  to  that  association  to  say  that 
these  securities  are  very  largely  in  excess  of  any  tangible 
property  owned  by  the  trustees.  Clearly  it  would  not  be 
possible  for  the  New  England  Gas  &>  Coke  Company  or  any 
corporation  to  receive  either  under  our  general  laws,  or  under 
any  special  act,  a  charter  which  would  legalize  $35,000,000 
of  securities  of  the  nature  of  those  which  the  New  England 
Gas  and  Coke  Company  have  issued  ;  and  yet,  the  enactment 
of  any  law  which  will  place  the  New  England  and  Coke  As- 
sociation under  the  control  of  the  Board  of  Gas  and  Electric 
Light  Commissioners  as  the  New  England  Gas  and  Coke  As- 
sociation  at  present  exists,  without  first  compelling  it  to  in- 
corporate, would  be  a  legislative  recognition  and  approval 
of  its  $35,000,000  of  securities,  and  would  compel  the  Board 
of  Gas  and  Electric  Light  Commissioners  for  all  time,  in 
arriving  at  the  cost  price  of  gas,  to  reckon  and  allow  all 
charges,  interest  or  dividends,  that  the  New  England  Gas 
and  Coke  Association  chose  to  pay  upon  the  $35,000,000  of 
securities,  not  exceeding  of  course  the  10  per  cent,  hereto- 
fore recognized  by  custom.    Clearly  under  any  such  law  the 


1900.] 


HOUSE  —  No.  1405. 


25 


price  of  gas  must  be  at  once  raised  considerably  above  a 
dollar.  Clearly  after  such  legislative  approval  no  court 
would  permit  the  Commissioners  to  fix  the  price  of  gas  so 
low  that  a  fair  dividend  on  all  its  capitalization  could  not  be 
paid. 

It  would  be  infinitely  better  to  do  absolutely  nothing  and 
leave  the  New  England  Gas  &  Coke  Company  to  work  out 
its  own  salvation  or  destruction  as  a  trust ;  to  leave  the  local 
gas -companies  as  Massachusetts  corporations  which  can  in 
time  be  controlled  or  abolished  by  the  Legislature,  than  thus 
to  saddle  by  legislative  sanction  the  $35,000,000  of  watered 
capital  upon  the  gas  consumers  of  Boston,  in  such  away  that 
no  court  will  thereafterwards  permit  either  the  Gas  Commis- 
sioners or  the  Legislature  to  reduce  the  price  of  gas  below 
$1.25  or  $1.50,  for  the  reason  that  without  such  price  no 
dividend  can  be  paid  on  the  capital  which  the  Legislature  has 
recognized,  once  for  all,  as  properly  invested  in  the  gas 
business. 

In  framing  the  bill  submitted  herewith  your  committee 
has  given  careful  and  due  consideration  to  the  arguments 
which  have  been  submitted  by  the  friends  of  the  New  Eng- 
land Gas  &  Coke  Association  which  have  all  led  up  to  two 
conclusions,  first,  the  destruction  of  an  established  enter- 
prise, and,  second,  the  unconstitutionality  of  legislative  in- 
terference. We  regard  the  claim  that  the  enactment  of  any 
law  which  will  compel  the  New  England  Gas  &  Coke  Associ- 
ation, or  any  other  association  of  individuals  engaged  in 
supplying  gas  to  the  people,  to  submit  itself  to  the  regula- 
tions of  our  laws  would  be  destructive,  is  ill  founded.  The 
New  England  Gas  &  Coke  Association  is  in  existence  and 
doing  business  at  the  present  time.  Its  business  consists 
of  manufacturing  and  selling  in  our  state,  coke,  gas  and 
others  products  of  coal.  To  do  and  to  continue  to  do  this 
business  it  is  necessary  for  this  enterprise  that  it  be  allowed 
to  remain  in  full  possession  and  control  of  its  works  at  Everett 
and  the  cash  capital  of  which  it  is  now  possessed,  and  it  is 
certainly  unnecessary  for  this  committee  tor  eport  that  no 
legislature  in  Massachusetts  will  pass  auy  law  which  will  take 
away  from  this  association,  or  any  association  or  individual, 
any  property  of  which  they  are  legally  possessed,  nor  is  it 


26  GAS  INVESTIGATION.  [June, 


the  desire  of  this  committee  to  accomplish  any  such  purpose. 
On  the  contrary,  your  committee  is  certain  that  the  bill  here- 
with submitted  will  in  no  way  interfere  with  the  extensive  v 
plant  of  this  association  or  the  large  cash  capital  it  now  has 
on  hand  for  the  conduct  of  its  business,  both  of  which  have 
been  derived  from  the  manufacture  and  sale  of  $35,000,000 
stock  and  bonds,  or  in  any  other  way  with  the  manufacturing 
business  of  the  company,  and  your  committee  is  sure  that 
the  passage  of  this  bill  will  not  affect  the  $35,000,000  worth 
of  stocks  and  bonds  which  have  already  been  issued.  This 
$35,000,000  of  stocks  and  bonds  are  selling  in  the  market 
to-day  at  a  total  valuation  of  only  $14,000,000,  and  your 
committee  feels  confident  that  the  New  England  Gas  & 
Coke  Association  will  not  find  it  difficult,  much  less  impos- 
sible, to  quickly  and  inexpensively  incorporate  itself  with 
a  capital  sufficiently  large  to  take  care  of  all  of  its  stock 
and  bonds  at  the  present  market  price  which  will  be 
outstanding  after  it  has  purchased  and  cancelled  those 
which  it  will  be  able  to  purchase  with  the  proceeds  of 
the  sale  of  a  number  of  millions  of  dollars  worth  of  stock 
and  bonds  of  local  companies  which  are  now  in  its  treasury 
and  which  were  purchased  by  it  at  the  inception  of  its  enter- 
prise for  the  purpose  of  controlling  the  business  of  the  local 
gas  companies,  and  which  under  the  conditions  which  will 
exist  after  the  passage  of  the  bill  which  is  herewith  sub- 
mitted it  will  no  longer  need  for  that  purpose.  Clearly 
there  is  no  element  of  destruction  to  legitimate  enterprise  in 
this  bill. 

We  deem  the  bill  clearly  constitutional  from  either  one  of 
two  aspects.  The  right  of  the  Commonwealth  to  regulate 
any  permanent  occupancy  or  use  of  the  highways  has  long 
been  recognized.  It  seems  to  us  clear  that  the  Legislature 
can  regulate  what  shall  be  allowed  to  pass  through  perma- 
nent structures  in  the  highways  or  to  say  that  none  but  ap- 
proved corporations  can  acquire  such  permanent  right. 

Secondly,  it  is  within  the  so-called  police  power  of  the 
Legislature  to  provide  in  what  manner  and  under  what  con- 
ditions dangerous  substances  such  as  gas  can  be  sold  to  the 
people.  If  the  State  is  of  opinion  that  this  matter  can  be 
most  easily  regulated  by  providing  that  none  but  corpora- 


1900.] 


HOUSE  —  No.  1405. 


27 


tions  which  owe  their  existence  to  the  will  of  the  State  shall 
deal  in  this  dangerous  substance,  it  may  clearly  so  provide. 
Indeed,  it  is  within  the  power  of  the  Legislature  to  provide 
that  only  one  particular  corporation  shall  have  the  exclusive 
privilege  of  supplying  gas  to  the  city  and  people  of  Boston. 
"  Legislation  of  that  character  is  not  liable  to  the  objection 
that  it  is  a  mere  monopoly,  preventing  citizens  from  engaging 
in  an  ordinary  pursuit  or  business  open  as  of  common  right 
to  all,  upon  terms  of  equality;  for  the  right  to  dig  up  the 
streets  and  other  public  ways  .  .  .  and  place  therein  pipes 
and  mains  for  the  distribution  of  gas  for  public  and  private 
use,  is  a  franchise,  the  privilege  of  exercising  which  could 
only  be  granted  by  the  State,  or  by  the  municipal  govern- 
ment of  that  city  acting  under  legislative  authority." 

NewT  Orleans  Gas  Light  Co.  v.  Louisiana  Light,  etc.,  Co., 
115  U.  S.  650. 

In  the  same  case  Mr.  Justice  Harlan  quotes  from  another 
case  to  the  effect  that  4  6  the  right  to  operate  gas  works  and 
to  illuminate  a  city  is  not  an  ancient  or  usual  occupation 
of  citizens  generally.  ...  It  is  a  franchise  belonging  to 
the  State,  and  in  the  exercise  of  the  police  power  the  State 
could  carry  on  the  business  itself  or  select  one  or  several 
agents  to  do  so." 

We  think  the  general  principles  showing  the  constitution- 
ality of  the  act  which  we  recommend  are  sufficiently  set  forth 
in  the  case  referred  to  and  in  the  other  gas  and  water  cases 
in  the  same  volume  of  the  United  States  Supreme  Court 
Eeports.  It  seems  too  clear  to  need  further  statement  that 
if  it  is  within  the  power  of  the  Legislature  to  say  that  one 
corporation  shall  have  the  exclusive  privilege  of  providing 
the  light  for  a  city,  it  is  within  the  power  of  the  Legislature 
to  say  that  only  corporations  which  have  complied  with  our 
general  laws  shall  have  the  privilege  of  providing  illuminat- 
ing gas  in  a  city. 

That  the  manufacture  and  storage  of  gas  is  a  business 
which  may  endanger  the  health  of  the  people  will  probably 
need  no  comment  in  the  city  where  the  unfortunate  gas  ex- 
plosion of  a  few  years  ago  was  so  destructive,  and  where 
the  newspapers  comment  from  week  to  week  on  the  death 
of  an  additional  victim. 


28 


GAS  INVESTIGATION.      [Jane,  1900. 


That  such  a  business  is  within  the  power  of  the  Legisla- 
ture to  regulate  under  the  so-called  police  power  is  certainly 
as  clear  as  that  the  business  of  slaughtering  cattle  is  within 
such  power,  and  the  United  States  supreme  court  has  held 
that  a  grant  of  an  exclusive  privilege  of  slaughtering  cattle  in 
the  vicinity  of  a  city  was  a  valid  excercise  of  the  police 
power. 

Slaughter  House  Cases,  16  Wallace,  36. 
That  this  same  power  is  recognized  as  applying  to  gas 
companies,  see  also  :  — 

Jamieson  v.  Indiana  Natural  Gas,  etc.,  Co.,  128  Indiana, 

555. 

Bath  Gas  Light  Company  v.  Claffy,  26  New  York,  N.  Y. 
Supp.  287. 

State  v.  Columbus  Gas  Light  Co.,  34  Ohio  St.  572. 
Zanesville  Gas  Light  Co.,  47  Ohio  St.  1. 

c.  j.  Mcpherson, 

For  the  Committee  on  Manufactures. 

Messrs.  B.  Herbert  Woodsum,  William  H.  Lott,  Francis 
A.  Harrington,  Chas.  F.  A.  Smith,  A.  S.  Apsey,  James 
Howell,  M.  W.  Burlen,  William  L.  Mooney,  dissent. 


//  Hi  "Mttin  M  m 


HI  K 


